U.S. Mortgage Crisis Slams Property Values, State Tax Receipts
November 27th, 2007Via: Bloomberg:
The worst U.S. housing recession in 16 years will drive down property values by $1.2 trillion next year and slash tax revenue by more than $6.6 billion, according to a report by the U.S. Conference of Mayors.
California, the hardest-hit state, will suffer a $630.6 billion decrease in property values that will cut property tax revenue to local governments by almost $3 billion, the study found. The New York City region will see the greatest slowdown in the output of goods and services because of the mortgage crisis, according to the report.
The U.S. residential real estate market is faltering as rising foreclosures among subprime borrowers have pushed down prices and led to a record supply of unsold homes. Foreclosures among homeowners with subprime adjustable-rate mortgages have reached a five-year high.
“The real estate crisis of 2007 and 2008 will go down in the record books,” according to the report, released as the Conference of Mayors gathers in Detroit today for a special meeting to discuss the housing slump. “The wave of foreclosures that has rippled across the U.S. has already battered some of our largest financial institutions, created ghost towns of once vibrant neighborhoods — and it’s not over yet.”
Wow. A lot of state governments are already seriously in the red. Wisconsin, where I live, has been generally thought to be in relatively better shape, but just the same, this news story appeared in the Milwaukee Journal Sentinel yesterday.